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Tradeshift, a ‘social network’ for invoices raises $75 million, valued at $600 million

Tradeshift, a start-up that helps businesses send and pay invoices using software, has raised $75 million from a number of big name investors including HSBC.

The latest funding round values the company at around $600 million, according to a source close to the situation.

Businesses trade with each other and need to pay for those services. Traditionally invoices would be sent via fax or other offline methods all done on paper. This is an expensive and inefficient method. Tradeshift automates that process in a kind of "social network" that connects suppliers and companies, according to chief executive Christian Lanng.

The latest round was led by Data Collective and included HSBC, American Express Ventures, Notion Capital, CreditEase Fintech Investment Fund, and Pavilion Capital, a subsidiary of Temasek Holdings.

Lanng said that being backed by large financial institutions gives Tradeshift access to a larger customer base as well as making its software the "de facto" invoicing software globally. Banks like HSBC are able to get access to data such as invoice payments by companies that could help them assess the risk profile of a potential borrower before lending them money.

"This is data they don't usually have," Lanng told CNBC in an interview.

'Growing like mad' in China

Tradeshift now has a total user base of over 800,000 while it saw 250 percent growth in transacted value year-over-year in 2015. Lanng could not disclose the exact figure but said the company is approaching $5 billion worth of transactions this month alone.

But the hotspot for the company has been Asia, where Tradeshift is "growing like mad" in China and Japan, according to Lanng. The co-founder said that it acquired 10 customers in the first quarter in China alone.

Tradeshift's software allows western businesses to connect and transact with suppliers in China, which as seen as one of the world's biggest manufacturing hubs.

Christian Lanng, chief executive of Tradeshift
Tradeshift
Christian Lanng, chief executive of Tradeshift

But Tradeshift is playing in a highly competitive space. Rival Taulia, which offers a similar software to Tradeshift, raised $46 million earlier this year, while new companies like Fluent are experimenting with blockchain technology to solve the global supply chain issue. In addition, large firms are also competing with Tradeshift. In April, Western Union launched its own business-to-business platform to help companies connect with and pay each other. Chinese e-commerce giant Alibaba also does this.

IPO plans

With the availability of capital, many start-ups have opted to stay private for longer, but Lanng said that an initial public offering (IPO) is on the cards in the next couple of years.

"I think it has recently become very fashionable in Silicon Valley to say you don't want to IPO, I believe there are lots of really good merits in IPO-ing. I won't put a timeline on it. But we definitely moving to be IPO-ready in the next couple of years and I think it's healthy for a company to do," Lanng told CNBC.

"We have a very long-term vision for Tradeshift and as part of that an IPO is certainly in the future."